The Stock Market and the Economy.
Seasonal factors could help lift the market but the fundamentals in the economy could help keep it up.
The stock market is normally an excellent barometer of economic health. The bear market that began in early 2000 accurately anticipated the economic recession of 2001. But the market and the economy then experienced an unusual decoupling.
The_Stock_Market_and_the_Economy.html
After 1901, there was no pronounced immediate downtrend in real equity prices, but for the next decade, prices bounced around or just below the 1901 level and then fell.
After_1901.html
S&P 500 Index over the past 85 years.
The table appearing below highlight performance data for the S&P 500 Index by decade from 1920-1999 and for selected multiyear time periods from 1926-2004.
S&P_500.html
2001 Recession.
What happened in the 2001 Recession?
As the economy headed into recession in 2001, businesses faced a classic pattern:
they were producing more goods than customers demanded, causing inventories to build up. Companies then adopted painful measures to get production back in line with sales by cutting payrolls and slashing capital spending. Those austerity measures then radiated throughout the economy, as they do in economic downturns, reinforcing any weakness that already existed.
2001_Recession.html
Presidential Election & the Stock Market.
Stocks found additional momentum as the new presidential race geared up. 2003 was the third year of the four-year presidential cycle, which historically has been the strongest for the S&P 500. And, it was. In 2003, the Stock Market post a strong gain.
Presidential_Election.html
Stocks and Bonds in the long run.
Stocks have been, are, and should remain one of the best long-term investments around.
Over the short term, however, other asset classes can outperform.
Stocks_and_Bonds_in_the_long_run.html
Stock Valuation over time.
It has been shown that stock price declines are not that transitory, that they can persist for decades, and thus that even long-run investors should see risk in stock market investments.
There is also reason to believe that much of the enthusiasm for mutual funds is a sort of investor fad that has not been caused by any real learning.
Stock_Valuation.html
Factors affecting Earnings Growth.
The list of factors that could potentially interrupt earnings growth is of course very long. Some of them are set forth below, with no presumption that any of these is more or less likely as of the turn of the New Millennium.
Factors_affecting_Earnings_Growth.html
